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Funds held in your IOLTA account are deemed abandoned (unclaimed) if the owner has not accepted payment of the funds, corresponded in writing about the funds, or otherwise indicated interest in the funds within two years after the funds are payable or distributable to the owner.

What If I Need to Remit Funds Early?

What if you are retiring before October and want to report and remit unclaimed funds now so you can close your IOLTA account? Or perhaps you need to close your law office for health reasons and it isn’t feasible to hold off reporting and remitting funds. The DSL provides an “early reporting request form” here, but this isn’t necessarily the procedure you should follow.

Before the redesign of its website, the DSL instructed lawyers to send a request for early remittance to the Oregon State Bar, along with an explanation and a description of the attempts made to locate owners of the funds. This language has disappeared with the 2017 site redesign, but since abandoned IOLTA funds are paid over to the OSB, your best bet is to ask the OSB General Counsel’s Office.

What If I Am Not in Compliance?

The same caveat applies if you need an extension of time (are not in compliance). The DSL offers an extension request form, but before you fill it out, call the OSB. Previously, lawyers requesting an extension to report and remit abandoned IOLTA funds were told to contact the bar at its mailing address:

Oregon State Bar
P.O. Box 231935
Tigard, OR 97281-1935

This may (or may not) be the current procedure. It is unfortunate the new DSL website does not offer clarification. To be safe, speak with OSB General Counsel.

Will I Get in Trouble If I Don’t Report and Remit Unclaimed Funds?

A civil penalty is possible, but unlikely. ORS 98.992 provides:

A person who willfully fails to render any report, to pay or deliver property or to perform other duties required may be required to pay a civil penalty.

This penalty shall be assessed only after at least one reporting cycle

Only after the department has provided the person with written instructions, including copies of applicable laws and policies.

The department may waive any penalty due under this section with appropriate justification.

Bar discipline? That’s a horse of a different color.

OSB Formal Opinion 2005-48 makes clear that lawyers “must comply” with the provisions of the Uniform Disposition of Unclaimed Property Act. Given the ethical duty to safeguard client funds, this makes sense: obeying the statute is the highest level of protection you can offer once a client has walked away from his money.

Additionally, Oregon RPC 1.15-2(e) provides “The lawyer or law firm shall review the IOLTA account at reasonable intervals to determine whether circumstances have changed that require further action with respect to the funds of a particular client.”

If you are fulfilling this responsibility, you should notice whether you are holding funds that are abandoned and take appropriate action. (In this case, report and remit on a timely basis.)

What Should I Do Now?

I am a believer that it is never too late to do the right thing.

If you previously failed to report and remit funds, contact the bar. This will take some courage – no doubt. However, continuing to put the task off will only make the situation worse.

If you are concerned about the consequences of your noncompliance, get help. The names of top-notch lawyers who specialize in ethics defense are readily available. These specialists regularly write and speak on ethics topics.

Funds held in your IOLTA account are deemed abandoned (unclaimed) if the owner has not accepted payment of the funds, corresponded in writing about the funds, or otherwise indicated interest in the funds within two years after the funds are payable or distributable to the owner.

What If I Am Not in Compliance?

The DSL website instructs lawyers who are not in compliance to contact the Oregon State Bar for an extension to file the report. Therefore, if you had unclaimed funds as of June 30, 2016, but missed the October 2016 reporting and remittance deadline, contact the bar. The site provides a mailing address only:

Oregon State Bar
P.O. Box 231935
Tigard, OR 97281-1935

Presumably, the best method for requesting an extension is to send a letter to the above PO box.

What If I Need to Remit Funds Early?

As noted above, remittance normally occurs in the month of October. What if you are retiring before October and want to report and remit unclaimed funds so you can close your IOLTA account? Or perhaps you need to close your law office for health reasons and it isn’t feasible to hold off reporting and remitting funds? The DSL website instructs lawyers in these situations to send a request to remit early to the Oregon State Bar. Include the reason for remitting early and describe your attempts to locate the owners of the funds. As with an extension, it appears the most appropriate contact method is to send a letter to the bar’s PO box.

What Happens If a Client Contacts Me After I’ve Reported Her Funds as Abandoned?

Clients or other owners of abandoned funds may make a claim for return of their money. The DSL website provides the following advice:

If the property is not listed on the DSL/UP owner search, you can direct owner inquiries to the Oregon State Bar. Once DSL/UP has added the names to the owner search database, claimants may file their claim inquiry via DSL/UP. Inquiries against LTA (lawyer trust account) or IOLTA property will be referred to the Oregon State Bar for review and approval.

Will I Get in Trouble If I Don’t Report and Remit Unclaimed Funds?

A civil penalty is possible, but unlikely. ORS 98.992 provides:

A person who willfully fails to render any report, to pay or deliver property or to perform other duties required may be required to pay a civil penalty.

This penalty shall be assessed only after at least one reporting cycle

Only after the department has provided the person with written instructions, including copies of applicable laws and policies.

The department may waive any penalty due under this section with appropriate justification.

Bar discipline? That’s a horse of a different color.

OSB Formal Opinion 2005-48 makes clear that lawyers “must comply” with the provisions of the Uniform Disposition of Unclaimed Property Act. Given the ethical duty to safeguard client funds, this makes sense: obeying the statute is the highest level of protection you can offer once a client has walked away from his money.

Additionally, Oregon RPC 1.15-2(e) provides “The lawyer or law firm shall review the IOLTA account at reasonable intervals to determine whether circumstances have changed that require further action with respect to the funds of a particular client.”

If you are fulfilling this responsibility, you should notice whether you are holding funds that are abandoned and take appropriate action. (In this case, report and remit on a timely basis.)

What Should I Do Now?

I am a believer that it is never too late to do the right thing.

If you failed to report and remit funds in October, write to the bar as instructed above. Putting off reporting and remitting unclaimed funds because you fear potential discipline will only make the situation worse, not better. If you are concerned about the consequences of your noncompliance, get help. The names of top-notch lawyers who specialize in ethics defense are readily available. These specialists regularly write and speak on ethics topics. Pick up the phone, schedule a consultation, and make a plan to move forward. Don’t let allow a misunderstanding or mistake to become an insurmountable problem.

Don’t be afraid to ask – or learn! Processing ACH payments (yesterday’s post) is one of many reasons it pays to be educated. Attend Ethical Trust Accounting on October 27 and have complete confidence that all your bases are covered.

This two-hour CLE has been approved for 2.0 MCLE ethics credits. Topics include:

Pursuant to ORS 98.332, funds held by a fiduciary are deemed abandoned if the owner has not accepted payment of the funds, corresponded in writing about the funds, or otherwise indicated interest in the funds within two years after the funds are payable or distributable to the owner.

Where Can I Find the Paperwork?

Reporting forms can be found on the DSL Web site. Forms 1a and 2a must be completed and sent to the DSL.

Funds deemed abandoned as of June 30 of each year are to be reported to the DSL and paid to the OSBduring the month of October of that same year.

Is There a Way to Make this Process Easier?

Create recurring annual reminders in your calendar or to-do list. The first reminder should occur annually on June 30 reminding you to assess whether you hold abandoned funds. The second reminder should occur annually in October, prompting you to complete the paperwork and remit the funds.

Is it Possible to Avoid Abandoned Funds?

In most instances, yes. Balance your bank accounts every month and carefully monitor outstanding transactions. If a check has not cleared for two consecutive statement cycles, track it down immediately. Contact the client or third party. Verify that your check was received. If the check is lost, you may want to request a stop payment. In some instances, this is a difficult decision since the stop payment fee may be more than the amount of the original check.

Keep in mind that when a check paid out of client funds is not cashed by the recipient, those funds revert to the client and should be reimbursed to the client.